There are three major modern approaches to marketing and they include Product Orientation, Market Orientation and Asset-Led Marketing. Let’s take a look at Asset-Led Marketing in this article.
A third way between Product Orientation and Market Orientation is called Asset-Led Marketing. In fact, it is a mixture of both marketing orientations.
Asset-Led Marketing is an approach to Marketing that bases strategy on the firm’s existing strengths (its core assets) instead of purely on what the company is able to produce or what the customers want at the given moment.
Businesses using Asset-Led Marketing do not aim to satisfy all customers in all markets. They consider their own strengths instead to make only those products that use and take advantage of those strengths.
What the business is especially ‘good at’ is called Core Competence. To adopt Asset-Led Marketing, the Core Competence of a business must be in developing and selling new products. The firm’s Core Competence may relate to both physical assets (fixed assets) and non-physical assets (human assets).
Why would companies use Asset-Led Marketing?
Asset-Led Marketing recognizes that Marketing is constrained by other functions of the business. Many firms these days fall into this category because Market Orientation has its limitations.
The problem is that if a firm aims to respond to every market trend, new fashion and customer requirement, then, it may well overstretch its scarce resources. Therefore, it will end up with providing mediocre products after all. Also, trying to offer too many choices, so that every consumer’s need is met, is going to be extremely expensive.
It is not true that market-oriented businesses will always succeed because market research itself does not guarantee any success. Neither does researching and developing innovative products by product-oriented businesses.
The success and survival in the competitive and globalized markets of the modern world depends on the performance of all business function – the whole company. Plus, a little bit of luck.
Examples of assets that can be used for Asset-Led Marketing approach
In order to adapt the asset-based approach to Marketing, the business must be really good at something. The business makes the best use of its strong points to develop goods and services. The firm’s Core Competence may include:
- Fixed Assets. Strong manufacturing base. Innovative production capabilities. Well-established distribution network.
- Brand. Global reach and enormous brand recognition. Strong brand name and customer loyalty. Impeccable reputation and image. Ability to extend the lifecycle of popular products.
- People. Highly skills and knowledgeable personnel. Exceptional management team with decades of experience.
Examples of companies using Asset-Led Marketing approach
Example 1: Coca Cola used its global reach and enormous brand recognition as well as well-established distribution network to launch new varieties of soft drinks in addition to the classic Coke such as Diet Coke, Coke Zero, Cherry Coke, etc. Also, thanks to its strong manufacturing base, Coca Cola is entering into other drink sectors such as pure water, fruit juice, coconut water, etc.
Example 2: Confectionary companies that sell and distribute chocolate, candy and gum products rely on their strong brand name to launch new products. Cadbury used its impeccable reputation and image for chocolate brand to extend into related products such as desserts, ice creams, cakes and cookies.
Example 3: Levi Strauss and Lee used its strong brand name and customer loyalty not only to sell jeans, but also other types of clothing and accessories such as shirts, T-shirts, leather belts and socks.
Example 4: German car producers Audi and BMW have not entered into other market segments such as industrial vehicles but only focus on manufacturing family cars, sports cars and SUVs (Sports Utility Vehicles). Knowledge about car building and quality management are strong assets of German car companies.
Advantages of Asset-Led Marketing
The benefits of Asset-Led Marketing include:
- Focus on core strengths. The whole marketing strategy of an asset-led business revolves around the Core Competence of the company. The firm is fully aware of its strengths and is using them to create a marketing plan that will work for the whole business.
- Saving costs on Market Research. Companies using Asset-Led Marketing base their marketing strategy on internal strength to produce products. These companies rarely spend large amounts of money on identifying consumer needs and wants through conducting market research to develop products accordingly. The savings of course contribute towards improving profit margins.
- Customer loyalty. Focusing the business strategy around Core Competencies to create innovative and quality products can gain customers’ love. It is because the success of one product can contribute to supporting the success of other products that the company is launching. The products will be reinforcing each other as the business is developing based on its core strengths from the past. This will help to create immense brand loyalty for all the products leading to increased Sales Revenue in the long term.
Disadvantages of Asset-Led Marketing
The drawbacks of Asset-Led Marketing include:
- Not suitable for all businesses. Not all companies have strong assets, or core strengths. This applies especially to start-up companies and small businesses which are still in the survival stage and growth stage. Asset-led marketing is usually suitable for large well-established companies. It is because they have already been successful in specific markets. And now, they are just trying to leverage their Core Competencies to expand the business into new markets.
- Lack of flexibility. Companies adopting asset-led approach to marketing fail to consider the changes in the marketplace. They tend to ignore market trends, competitors’ reactions or any other market factors that impact the business. Because these companies are so inward-focused, this often results in bias as the firm is neglecting the constantly changing market environment, consumer preferences and taste changes.
- Missing new growth opportunities. Constant focus on existing strategic competitiveness may not work out well in the market as competitors build up a better competitive power. Focusing only on internal strengths of the company may lead to weakening position against rivals when other companies adapt better to the market demands. Failure to launch new products may negatively impact on other existing products and the company’s reputation.
To summarize, remember that nowadays there are three main approaches to doing marketing. These approaches include Product Orientation, Market Orientation and Asset-Led Marketing.
